Taxpayers Stripped of Clothing Deductions by an Objective Standard

In Pevsner v. Commissioner, the Fifth Circuit Court of Appeals held that the purchase price of expensive designer clothing was not deductible as an "ordinary and necessary" business expense of a boutique manager, even though the clothing was to be worn only at the boutique. With this holding, the court adopted an objective standard for determining adaptability of work clothing to general use. Ms. Sandra Pevsner was the manager of a boutique that sold only women's clothes and accessories designed by Yves St. Laurent (YSL). The apparel was very expensive, and Pevsner was required by her employer to purchase and wear the clothing, primarily to promote sales of the clothing.

During 1975, Pevsner bought several items of clothing, for which she paid approximately $1380. On her 1975 tax return she deducted a portion of that amount.' When the Commissioner denied the deduction, Pevsner petitioned the Tax Court seeking deduction of the full $1380. The Tax Court allowed the deduction as an ordinary and necessary business expense. The Commissioner appealed that ruling and the Fifth Circuit reversed.